A rise in the volume and variety of data-hungry mobile devices, including more affordable smartphones, tablets and e-readers, is set to be the most disruptive force in the wireless industry in the next three years. Operators are investing heavily in their networks to support new devices and services, yet they identified driving revenue from mobile broadband as their most significant challenge. These were the key findings of a global operator survey commissioned by Radisys® Corporation (NASDAQ: RSYS) and undertaken by wireless analysts Senza Fili Consulting, ahead of Mobile World Congress 2012.
In January and February 2012, senior decision makers from operators in North America, Europe and Asia Pacific were interviewed for the survey. The survey revealed which technologies or services operators expected would have the most significant effect on the industry, how those technologies would impact network performance, subscriber experience and revenue, and which they would support or fight.
Highlights from the global operator survey include:
- 100 percent of European and Asia Pacific operators intend to deploy small cell networks within two years; 100% of North American operators will do so but in three years’ time
- 86 percent of all operators surveyed support VoLTE
- 82 percent of all operators surveyed support Wi-Fi® offload
- 82 percent of all operators surveyed believe new mobile devices will have a positive impact on revenues and subscriber experience
- 71 percent of all operators surveyed viewed new mobile devices as the most disruptive force in the next three years
- In North America, the most disruptive force will be VoLTE. In Europe, it will be new mobile devices, and in Asia Pacific, it will be, jointly, Wi-Fi offload, small cells and TDD/FDD hybrid networks, with devices in second.
- 58 percent of all operators surveyed believe LTE Advanced will have a highly positive impact on revenues and subscriber experience; 66 percent agree that it will not happen for three years
“Devices will continue to be the main driver to change in our industry,” comments Monica Paolini of Senza Fili Consulting. “They have fundamentally changed the way subscribers use mobile broadband — why they use it, what they do with it, and how much traffic they generate. Yet, there is a pervasive feeling that we have just started to scratch the surface.”
Click through for results from a mobile operator survey focusing on mobile broadband support for data-hungry devices, commissioned by Radisys Corporation and conducted by Senza Fili Consulting.
Small cells deployed in urban or other high-traffic locations as an underlay to increase cellular capacity density are seen as a game changer, especially in Asia Pacific, where they are the joint highest-rated source of disruption. There are, however, obstacles to be overcome before deployments are widespread and many operators view small cell topologies as a gradual solution to capacity pressure points, rather than a radically new type of network topology.
What the operators said:
- “Today it is Wi-Fi offload, but in the long-term small cells will become more important to increase capacity. But we need to solve the backhaul challenges. Fiber is too expensive, and microwave is not ideal.” — North American survey participant
- “Wi-Fi offload is for residential offload and indoor public locations. Small cells for outdoor dense urban areas.” — APAC survey participant
VoLTE is almost universally recognized as a must have, but only at a later stage. Some operators want to deploy it sooner than others, but for most it is not perceived as an immediate requirement. Operators do not plan to deploy VoLTE because they need LTE to carry voice, but because they want to move to LTE-only devices.
There is little expectation that VoLTE will provide new revenues. On the contrary, VoLTE will put additional pressure on voice revenues if, as expected, voice services increasingly move to flat-fee plans. Among survey participants, 25 percent expect VoLTE to have negative impact on revenues or customer experiences.
What the operators said:
- “Circuit-switched voice is not going to disappear over the next five years. But we do need VoLTE to gradually reduce our dependency on legacy 3G and 2G networks, to a point where we will feel comfortable to turn them off. But it will take a long time.” — APAC survey participant
- “It is still crucial to have good quality voice on handsets. Without it subscribers will not be impressed by LTE. Equally important is the ability to seamlessly switch between voice and data, and that is not currently available.” — European survey participant
As operators wait for their LTE networks and their small cell deployments, many have deployed a Wi-Fi offload solution to ease network capacity pressure. Even though Wi-Fi was in many cases deployed as a temporary solution, the operators surveyed are keen to retain their Wi-Fi infrastructure and/or roaming agreements after deploying LTE and small cells. The role of Wi-Fi may be reduced by small cell deployments, but most operators see the two as complementary.
What the operators said:
- “Wi-Fi offload is crucial as we wait to deploy LTE or LTE Advanced.” — APAC survey participant
- “A crucial element to ensure continued success of Wi-Fi offload is to make the connection to Wi-Fi completely transparent, so that the subscriber does not even need to know whether Wi-Fi is used.” — North American survey participant
The impact of new devices on revenues and subscriber experience is expected to be largely positive across the world, but interestingly North American respondents have highest expectations, perhaps driven by a higher penetration of these new data-centric devices. Yet tablets have potential for creating a new headache for operators. Compared to smartphones, tablets generate much more traffic – and this is slated to increase as tablets evolve, more applications become available, and they increasingly use cellular networks instead of Wi-Fi for access.
What the operators said:
- “Devices will become big screens anchored in the cloud for content and applications. We will not need faster processors, but network reliability has to go up to support this model.” — European survey participant
- “We expect change to be driven by devices like tablets expanding functionality and gaining ground over other device categories.” — European survey participant
All operators surveyed agree that their main goal is to increase revenues both to retain profitability and to maintain investment in the infrastructure required to keep up with demand. Operators are challenged to balance future investment while also ensuring service monetization is possible despite the anticipated disruptions.
What the operators said:
- “We cannot afford to manage traffic growth without corresponding increases in revenues. We have ways to increase capacity but we cannot necessarily afford it.” — European survey participant
- “We need new more dynamic, application-based revenue models. Using a tonnage-based charging system is not sustainable in the long term. You do not want to charge everybody the same way: it has to depend on subscribers’ behavior.” — North American survey participant
Capacity comes to the fore as the main driver to deploy LTE Advanced, as it is for small cells and Wi-Fi offload. Overall North American survey participants are more optimistic about the opportunity that LTE Advanced offers, both in terms of improving subscriber experience and revenues, and in reducing costs and improving performance. And they expect to deploy it earlier: 67 percent of North American survey participants expect LTE Advanced to be deployed in two years, compared to 33 percent in Europe and APAC. This is in line with the more accelerated LTE deployment timeline in North America.
What the operators said:
- “LTE Advanced increases network capacity, but in most cases it will not improve the subscriber experience as small cells will.” — European survey participant
- “LTE Advanced is an incremental transition, not a game changer.” — European survey participant
